Written By: Ted Evanoff

President Donald Trump could spur Ford Motor Co. to move ahead with its planned truck plant near Memphis if he places tariffs on Mexico.

Trump this week told Fox News he would place a high tax on electric vehicles brought into the United States from assembly plants in Mexico.

The tax on imports, known as a tariff, could aid Ford by lifting the price consumers pay on electric autos made in Mexico.

Ford last September pushed back until 2027 making electric pickup trucks at the unfinished site 40 miles northeast of Memphis known as the Ford Blue Oval complex.

Slapping tariffs on Mexico could force higher prices on U.S. car buyers. Factories in Mexico already supply 20% of the autos on U.S. roads along with engines and components valued at more than $25 billion.

But a tariff, if it is imposed, would aid Ford Blue Oval by making its electric trucks' price more competitive with imports from Mexico.

Last September, Ford executives said the delay would let it put in place less costly battery technology.

The delay came as car executives in Detroit and policymakers in Washington warned lower-priced Chinese autos soon could come out of Mexico and draw American consumers away from the higher-priced vehicles now on the market.

Trump policy adviser Elon Musk, founder of Texas-based electric car maker Tesla Inc., was among the critics, telling reporters last fall that low-priced Chinese electric cars "will pretty much demolish most other car companies in the world."

In September, Jim Farley, Ford chief executive officer, told the Wall Street Journal the ascendancy of Chinese electric car makers posed an "existential threat" to Ford.

Farley's statement followed a letter in Washington issued by several members of the U.S. House Select Committee on the Chinese Communist Party. Their letter contends "the People’s Republic of China (PRC) is preparing to flood the United States and global markets with automobiles, particularly electric vehicles (EV), propped up by massive subsidies and long-standing localization and other discriminatory policies employed by the PRC.”

Trump responded on Monday, telling Fox News, "We’re going to put big tariffs on those cars" made in Mexico.

Chinese automakers exploring production in Mexico are BYD, Chery Automobile Co., and the MG brand of SAIC Motor Corp. BYD is the world's largest maker of electric vehicles.

Government-owned Chery, China's fourth-largest automaker, specializes in electric cars. Government-owned SAIC, China's largest automaker, was called Shanghai Automotive. It gained prominence when General Motors Corp. of Detroit entered the Chinese market in the late 1990s as the partner of Shanghai Automotive.

The typical Chinese electric auto for sale in China is priced at the equivalent of $29,000 to $35,000. This compares to the $41,000 Tesla Model 3, the least expensive Tesla in the United States. Ford prices its current electric truck, the F-150 Lightning, at about $50,000 for the base version and about $90,000 for the Platinum model.

Chinese electric vehicles are regarded as well-made and lower priced than any electric autos made by major rivals based in Detroit, Europe or Asia.

Chinese automakers benefit from subsidies provided by the Chinese government to bring down the cost of producing batteries and thermal systems that deal with battery heat production. Thermal systems, related electronic controls and batteries make up about half the cost of an electric car.

Putting assembly lines in Mexico would also aid Chinese automakers. Mexico wages average less than factory pay in China, where average manufacturing wages have risen for two decades to about $8 per hour.

Salaries for manufacturing engineers in Mexico average about $22,000 annually, while hourly wages for production workers average about $2.90 compared to $25 per hour in U.S. factories.

Autos shipped from Mexican plants enter the United States under liberal U.S.-Mexico trade rules enacted during Trump’s first administration when he replaced NAFTA with a new agreement known as USMCA (United States-Mexico-Canada Agreement).

Mexico now ranks as the world's fifth-largest car producer with 33 vehicle assembly plants operated by U.S., German and Japanese automakers. Assembly plants in Mexico now ship about 2.5 million vehicles each year to the United States.

Imposing a 25% tariff would add $3,000 to the price of a vehicle sold in the United States, estimates show from groups like the Council on Foreign Relations.

While electric cars shipped from China are not common in the United States, a plant near Memphis makes small electric work trucks based on Chinese technology. Mullen Automotive of Los Angeles opened this plant nearly three years ago at Robinsonville, Mississippi.

Ford moved ahead on Blue Oval City when President Joseph Biden touted green cars able to produce less greenhouse gas emissions. Tennessee pledged $900 million in incentives on condition that Ford open its 5,800-employee complex there.

Biden approved a $7,500 consumer tax credit for purchases of electric vehicles equipped with U.S.-made batteries and set a target for EVs to account for half of all new vehicle sales by 2030.

Trump has pledged to cut this $7,500 tax credit and eliminate Biden’s 50% EV sales goal altogether.